JPMorgan Chase CEO Jamie Dimon has once again warned that a recession remains the most probable outcome for the US economy, estimating the odds of a soft landing at just 35% to 40%. In a Wednesday interview with CNBC, Dimon highlighted persistent uncertainties including geopolitics, housing, fiscal deficits, spending, quantitative tightening, and the upcoming elections as key factors generating market consternation.
Dimon: Economy Has Outperformed, but Risks Remain
Dimon, who has been cautioning about economic headwinds since 2022, acknowledged that the economy has performed better than expected. While credit-card borrower defaults are rising, he noted that the US is not currently in a recession. However, he remains skeptical of the Federal Reserve's ability to bring inflation down to its 2% target due to future spending pressures. 'There's always a large range of outcomes. I'm fully optimistic that if we have a mild recession, even a harder one, we would be okay,' Dimon added.
JPMorgan Raises 2024 Recession Probability to 35%
Meanwhile, JPMorgan has increased its probability of a US recession in 2024 to 35%, up from 25% at midyear. Chief Global Economist Bruce Kasman communicated the revision to clients in a note Wednesday, attributing the shift to changes in inflationary pressures and a cooling labor market. The bank also maintained a 45% probability for a recession by the second half of 2025.
Wall Street Peers Follow Suit: Goldman Sachs Also Raises Forecast
Goldman Sachs similarly raised its recession probability from 15% to 25%, while noting that a downturn could be avoided if the Fed cuts rates or purchases bonds. Recent market volatility and mixed economic data have fueled growing concerns about the nation's economic health. Dimon's outlook and JPMorgan's updated forecast reinforce the view that the US economy faces significant downside risks in the coming quarters, though a recovery scenario remains possible if monetary policy adjusts.